Why World Pork Production is Changing so Rapidly

THE BridgeNews FORUM: Viewpoints on farming, farm policy and related agricultural issues.

October 15, 1999

CHURCHVILLE, Va.-Smithfield Foods, the Virginia-based meatpacking giant, recently bought three major U.S. hog-producing entities, Carroll's Foods, Murphy Family Farms and the pork-producing subsidiary of Tyson Foods, the Pork Group.

This will give Smithfield 13 percent of U.S. pork production, encompassing 785,000 sows and an annual production of nearly 13 million pigs. Smithfield says it will produce about 70 percent of these pigs through several hundred contract growers.

The Agriculture Department's latest hogs and pigs report says the U.S. breeding herd has dropped about 8 percent from the previous year.

But experts say the number of pigs per litter has risen to a startling 8.9. Today's leaner pigs also produce more meat per pound of live weight than in the past.

The hog industry is following the pattern of poultry, by using contract growers with big, confinement production facilities, specialized genetics, computerized feed systems and tight quality specifications.

The consumer gets a better product at a lower cost, and the grower can lay off some of his price risk on integrators like Smithfield Foods.

The harsh reality is that before this new hog model came along, the U.S. pork industry had been in deep trouble.

In a recent Agriculture Department report, Steve Martinez of the department's Economic Research Service notes that the real price of retail pork fell from $2.19 a pound to $1.28 a pound between 1955 and 1979 with no gain in sales. Consumers thought pork contained too much fat.

Today, Smithfield Foods is using the ultra-lean genetics expertise of the National Pig Development Co. of Yorkshire, England. The new hogs are said to produce one of the leanest meats of any kind.

Martinez reminds us what the old poultry industry looked like: flocks of a few hundred birds that were fed on whatever the farm grew. Hen meat was old, tough and dry. A few tender young roosters were sold in the spring (the famous "spring chickens").

During World War II, America rationed red meat, but not poultry, and broiler production tripled. That drove advances in genetics and feed research. Researchers discovered that additives like vitamin B-12 and the antibiotic Aureomycin increased weight gains as they sharply reduced disease risks.

The A&P supermarket chain of Montvale, N.J., began a "Chicken of Tomorrow" contest in 1945 that helped drive genetics toward birds with meatier breasts, thighs and drumsticks.

Martinez notes that U.S. poultry production costs fell by about half in the 20 years after World War II, while feed efficiency rose about 50 percent. Automated equipment cut labor requirements from 5.1 hours per 100 pounds of broiler meat to about 0.1 hours.

The broiler industry focused its growth in a rural South that was losing its cotton jobs.

Similarly, today's hog expansion is occurring in nontraditional areas like the depressed coastal counties of North Carolina, the high plains of Texas, even rural Utah.

Martinez says the percentage of U.S. hogs raised in big herds (more than 1,000 head) rose from 37 percent in 1987 to 71 percent in 1997, and that percentage is apparently still rising.

Smithfield's processing of engineered hogs has jumped from about 13,000 in 1993 to more than 1.6 million in 1997. The company has even gained a place in the ultra-picky Japanese market.

Does this mean the end of the family hog farm? Maybe not. Poultry today is still produced in family-owned units. Many of Smithfield's contract growers are husband-and-wife teams.

Poultry production contracts allow more people to continue living in America's rural areas than if the poultry industry had migrated to Brazil or Thailand.

For at least a century, Duplin and Sampson counties in North Carolina were among the state's lowest income counties. Their incomes today match the state average, thanks to hog industry expansion.

Many family farmers could match the high labor efficiency and first- class facilities of the contract grower-integrator model. They may even be willing to run the big price risks attached to the heavy capital investment required.

The swift pace of change in the American hog industry indicates that the old model of fat hogs, small herds and wasted animal feed is

gone forever. This is true both in America and around the world.

Hog farms in rural areas face a choice. They can either accept the new high-efficiency model or they can forget about adding value to their farm output and vibrancy to their region's economy.

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